May 09, 2025
Tax Highlights from the 2025 Newfoundland & Labrador Budget
HIGHLIGHTS FROM THE NEWFOUNDLAND AND LABRADOR BUDGET
Minister of Finance Siobhán Coady tabled the 2025/26 Newfoundland and Labrador provincial budget on April 9, 2025.
The budget projects a deficit of $372 million for the 2025/26 fiscal year, with the expectation that balance will be achieved next year and maintained over the foreseeable future. A $200 million contingency fund has been set aside to address potential economic impacts from U.S. tariffs this year. The forecasted deficit for the 2024/25 fiscal year now stands at $252 million, compared to the previously projected deficit of $152 million. The province’s net debt is projected to reach $19.4 billion this year.
On the income tax front, there are no changes to personal tax rates for 2025.
The following pages summarize the changes announced in the budget. Please note that these changes remain proposals until they are passed into law by the provincial government.
PERSONAL TAX MATTERS
Personal Income Tax Rates and Tax Brackets
There are no proposed changes to personal income tax rates. However, tax brackets and other amounts have been indexed by 2.3% to account for inflation. The table below outlines the tax rates and tax brackets for Newfoundland and Labrador in 2025.
| TAXABLE INCOME RANGE | 2025 TAX RATES |
|---|---|
| First $44,192 | 8.7% |
| Over $44,192 to $88,382 | 14.5% |
| Over $88,382 to $157,792 | 15.8% |
| Over $157,792 to $220,910 | 17.8% |
| Over $220,910 to $282,214 | 19.8% |
| Over $282,214 to $564,429 | 20.8% |
| Over $564,429 to $1,128,858 | 21.3% |
| Over $1,128,858 | 21.8% |
The table below outlines the 2025 combined federal and provincial highest marginal tax rates for various types of income.
| INCOME TYPE | 2025 COMBINED TAX RATES |
|---|---|
| Regular income | 54.80% |
| Capital gains | 27.40% |
| Eligible dividends | 46.20% |
| Non-eligible dividends | 48.96% |
CORPORATE TAX MATTERS
Corporate Income Tax Rates
The budget contains no proposed changes to corporate income tax rates. The table below outlines the Newfoundland and Labrador corporate tax rates and small business limit for 2025.
| CATEGORY | 2025 TAX RATES |
|---|---|
| General rate | 15.00% |
| Manufacturing and processing rate | 15.00% |
| Investment income rate | 15.00% |
| Small business rate | 2.50% |
| Small business limit | $500,000 |
The table below outlines the 2025 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).
| INCOME TYPE | 2025 COMBINED TAX RATES |
|---|---|
| Small business income | 11.50% |
| Active income over $500,000 | 30.00% |
| Manufacturing and processing income | 30.00% |
| Investment income | 53.67% |
OTHER INITIATIVES
Continuation and Modifications to Previous Budget Initiatives
The budget proposes to continue with certain initiatives introduced in recent budgets, including:
- Indexing the Seniors’ Benefit and its eligibility threshold to the Consumer Price Index, starting this year.
- Extending the availability of the All-Spend Film and Video Production Tax Credit – a refundable corporate income tax credit for eligible corporations at a rate of 40% of eligible production costs. The maximum tax credit is increased to $20 million annually per project.
- Providing a home and heating supplement of up to $500 to residents who currently rely on furnace or stove oil to heat their homes.
- Eliminating the retail sales tax on home insurance.
- Reducing the cost of registering passenger vehicles, light trucks, and taxis by 50%.
- Reducing provincial tax on gasoline by 8.05 cents per litre (including HST).
- Continuing availability of the 20% Green Technology Tax Credit to support businesses with specific capital costs for green initiatives, such as equipment for energy conservation and clean energy generation, and the efficient use of fossil fuels.
- Increasing the exemption threshold for the Health and Post Secondary Education Tax (HAPSET) from $1.3 million to $2 million in total payroll, after which the tax is payable by the employer (effective January 1, 2023).
WE CAN HELP
Your financial advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact.
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